Business is personal: How CEO personality influences agency costs

• 成果类型: Article
• 署名作者: Zhao, Zeyu; Yi, Xiwei; Lange, Donald
• 署名单位: Arizona State University; Arizona State University-Tempe; Chinese University of Hong Kong; Peking University
• 刊物名称: STRATEGIC MANAGEMENT JOURNAL
• ISSN/ISSBN: 0143-2095
• DOI: 10.1002/smj.70088
• 发表日期: 2026
• 关键词: DIVERSIFICATION-PERFORMANCE LINKAGE; UNETHICAL DECISION BEHAVIOR; firm performance; executive-compensation; corporate governance; 5-FACTOR MODEL; International diversification; IMPACT; OWNERSHIP; strategy

摘要

Research Summary We examine whether CEO personality traits influence the likelihood of engaging in behaviors that impose agency costs on the firm. We use an established open-language machine learning program to measure CEO Big Five personality traits based on CEO remarks during earnings conference calls. We theorize and find that higher levels of agreeableness and conscientiousness in CEOs are associated with lower agency costs (operationalized here as unrelated diversification and the decoupling of CEO pay from firm performance), while higher levels of neuroticism are associated with higher agency costs. By revealing how CEO personality traits affect agency costs, our study offers a new perspective on the sources of agency problems and broadens the application of CEO Big Five personality traits to corporate governance.Managerial Summary This study explores how a CEO's personality can shape decisions that affect company performance. Using an advanced language analysis tool, we assessed CEOs' personality traits based on what they say during earnings calls. We find that CEOs who are more agreeable and conscientious are less likely to make decisions that benefit themselves at the expense of the company-such as expanding into unrelated businesses or earning pay that does not reflect company performance. In contrast, CEOs with higher levels of neuroticism are more likely to engage in these costly behaviors. These findings suggest that understanding a CEO's personality can offer valuable insights into their leadership behavior and help boards and investors make better governance and hiring decisions.